As expected, the presentations at the GELPI Litigating Takings conference have been outstanding. This post only covers the first two panels. Over the coming week, I'll report on the rest of the conference.

Lingle v. Chevron

Bob Dreher (GELPI) and R.S. Radford (Pacific Legal Foundation) were up first, discussing Lingle v. Chevron. For those unfamiliar with the case, the Court's pre-Lingle takings cases had suggested that a regulation that does not substantially advance a legitimate government interest is a taking. In Lingle, the Court rejected the substantially advance test as a takings test. I summarize Lingle and explain my own views of the significance of the case in this essay.

Dreher, who had been counsel to Hawaii in the Lingle litigation, began the discussion by explaining how the substantially advance test had crept into takings law through citation to early substantive due process cases. Beyond eliminating the substantially advance test from takings doctrine, Lingle may have enduring significance due its separation of takings doctrine from substantive due process doctrine. This separation may be reflected in takings cases in several ways. It resolves the relevance of cases like Euclid v. Ambler Realty to takings doctrine (i.e., no relevance at all). It greatly reduces the ability of the government to rely on early substantive due process cases like Mugler v. Kansas. And it makes the economic impact on the property owner the paramount consideration in the takings analysis. I agree with Dreher completely on all of these points.

Dreher also noted that the rejection of the substantially advance test was a big deal because it killed off a pernicious doctrine that had been used by the 9th Cir. to invalidate rent control regulations. I've never taken the substantially advance test very seriously, largely because it so obviously engaged in Lochner-style review of legislative actions that I had a hard time seeing contemporary courts using the test to strike down regulations. But other panelists discussed a number of state cases that seemed to apply the substantially advance test, so I'm coming around to Dreher's view that it was a big deal.

R.S. Radford, who had been a leading proponent of the substantially advance test, began his talk with a good-natured acknowledgment of Bob's win in Lingle. The introduction to his paper written for the conference begins with the following from Monty Python and the Holy Grail:

Arthur: Now stand aside, worthy adversary.

Black Knight: 'Tis but a scratch.

Arthur: A scratch? Your arm's off!

Black Knight: No, it isn't.

Arthur: Well, what's that then?

Black Knight: I've had worse.

Radford's argument was that the character of the government action (which is at the heart of the substantially advance test) will survive in regulatory takings cases, allowing the effectiveness or lack of effectiveness of a government action to play a role in the regulatory takings inquiry. Radford noted that the character of the government act is certainly relevant to issues like the applicability of the nuisance exception. More importantly, he thought that the effectiveness of the government action will always play into the fairness inquiry that underlies much of the Court's regulatory takings jurisprudence. In the Q&A, Dreher and Radford agreed that the character of the action would remain in Court's unstated fairness analysis, but they disagreed on whether the fairness inquiry should focus on the impact on the property owner or on the benefit conferred to the public by the regulation.

Following up on this fairness point, Frank Michelman asked a very interesting question during the Q&A about squaring fairness concerns with "background principles" like necessity and the nuisance exception that allow the uncompensated destruction of property. Dreher said that he was uncomfortable with the underpinnings of some of the necessity cases, though he noted that in firefighting cases, the courts may allow property to be destroyed without compensation because they don't want firefighters to be thinking about the cost of their actions. Radford added that in many fire cases, the property is likely to be destroyed anyway.

Bullock focused on the Kelo decision itself, arguing that Kelo broke new ground in allowing economic development takings. While I agree that the Court had never previously allowed this type of taking, I think that Midkiff and Berman all but required the result in Kelo by articulating a highly deferential approach to public use (as discussed further here and here). So I think the Court might have broken even more ground new ground if it had disallowed the taking in Kelo. Bullock also criticized the way in which the Court seemed to think that fact that the agency exercising eminent domain had a detailed plan in place was relevant. I agree with his view that this is completely disconnected from the real world. Bullock wrapped up with a short discussion of the Kelo backlash, noting that 90+ percent of Americans disagree with the result in Kelo and that the backlash cuts across ideological lines.

Tom Merrill focused his discussion on the Kelo backlash, saying that the backlash has made him think about the different ways that academics and the general public frame eminent domain issues. He labeled the two approaches the utilitarian frame and the moral rights frame, which he noted had some similarity to Ackerman's distinction between the perspectives of the scientific policymaker and the ordinary observer. To the utilitarian, we have the institution of eminent domain to overcome holdout problems, and reconfiguration of rights should go forward any time there is a net benefit to society. As a result, the utilitarian would want public use to be broadly construed.

The moral rights perspective, in contrast, focuses on the property owner, and views eminent domain as government coercion against innocent parties. At one extreme, this view could call for a ban on eminent domain outright. A more moderate position is that you only take when there is some good moral reason to do so, and the moral justification for the taking is stronger if the benefits are transferred to the public. In this context the fairness test is the opposite of that articulated in Armstrong, focusing not on the impact on the condemnee but on the distribution of benefits of the taking to the public. People holding this view favor a more strict interpretation of public use, and tend to think that this should be an issue for the judiciary to resolve.

Merrill than asked what to make of all this? He said that he is not ready to chuck utilitarianism out the window just because 95% of Americans disagree with it, but that he is open to a more constrained view of eminent domain. He said he would agree with a ban on eminent domain where the sole purpose is to raise tax revenue, and would agree to a ban on the economic development takings of homes. (I've discussed banning economic development takings of homes, but allowing it for other types of property, here and here.) He also suggested that he doesn't disagree with a ban on the use of federal funds for economic development takings, because it would make state and local governments focus on costs of development projects.

In the Q&A, an interesting question was raised about why increasing the compensation paid to homeowners hasn't been more popular in the legislative response to Kelo. Merrill thought it was because the post-Kelo backlash is being driven from a moral rights perspective, which is more focused on the absolute right of the property owner. Bullock agreed, saying that people are concerned about possession of their homes. Merrill did note, though, that there is some empirical evidence that opposition goes down to eminent domain as compensation goes up.

Merrill also noted in answer to a question that it was somewhat discouraging that legislative reform needs a highly unpopular Supreme Court decision to go anywhere, and gave credit to the IFJ's very effective P.R. campaign about Kelo. Bullock, who had used the home as castle metaphor in his earlier discussion, was also asked whether poor people have castles. He answered emphatically yes, noting the importance in this context of making sure blight clearance is used to take truly blighted property.

Ben Barros

[Comments are open, but as always I have to review them before they post. Due to the HLS WiFi ban, discussed below, there will be some delay before I can get on-line to review comments]

So Harvard Law School has WiFi in all of their buildings, but does not allow access to guests or people attending conferences. So I'm at a public terminal in the basement of one of their buildings now. I'll post later tonight on the first day of the GELPI conference.

I'm off to Cambridge for the GELPI's Litigating Takings conference at Harvard Law School. I won't be trying anything close to live blogging, but new laptop and internet access willing, I will be posting on the proceedings.

A few weeks ago, James Salzman's new article Creating Markets for Ecosystem Services: Notes from the Field made an appearance on the Weekly Top 10. Salzman's article is fascinating, and I highly recommend taking a look. Natural resources law people probably already will be familiar with the general idea of ecosystem services, but ordinary property folks like me might not be. Here is a short excerpt that gives a sense of the idea in the context of water quality:

Imagine that the municipal water supplier owns the upland forest, which naturally filters and cleans water as it flows through the upper watershed. Property owners in the farmlands are dairy farmers, grazing cows on their fields beside the stream that flows into the reservoir. The farmers could manage their land to provide an improved service of water purification by planting riparian vegetation buffers (i.e., erecting fences to protect strips of plants alongside the stream from grazing). Such vegetative buffers capture nutrients and reduce silt before they reach the watercourse. Downstream water consumers benefit from these actions, which provide them with clean drinking water that does not require extensive pre-treatment. Farmers might benefit from reduced streambank erosion.

Traditionally, this would be the end of the story. No benefits would be produced, for few land owners actually would plant riparian buffers. Farmers may well have been informed of the benefits of this practice for themselves and for downstream users, but it is unlikely that they would change their behavior because of the hassle and cost of fencing and the concerns over the loss of productivity from setting aside pasture. And those who did fence off their streams would bear all the costs, with no contributions from those downstream who benefit from the positive externalities of cleaner water.

So how could the government ensure clean drinking water? The traditional engineer’s approach (“I’ve never seen a problem I can’t build around”) would likely involve building a pre-treatment plant. An ecosystem service approach of riparian buffers, however, would likely be less expensive. But what role should government play in ensuring provision of services?

The traditional regulator’s approach would likely impose prescriptive regulations to require farmers to plant riparian buffers. One could equally rely on financial penalties, levying a tax on farmers who do not have buffers, or trying to persuade farmers to put in buffers. As described in detail in Part V, such approaches have largely proven ineffective in the past because of overbreadth, strong political opposition, and poor compliance behavior in the face of what are viewed as punitive or intrusive measures.

One could, however, view the issue from a totally different perspective. Why not, one might argue, simply recognize this situation for what it is—the provision of valuable services to consumers—and realize this through an explicit arrangement of payments for services rendered? Put another way, why not treat farmers’ provision of ecosystem services as no different from their provision of other marketable goods? Farmers are certainly well accustomed to contractual arrangements for their agricultural products. Dairy farmers sign contracts to sell their milk; potato farmers do the same for their spuds. Why not treat the provision of water filtration services as a similar business transaction, where farmers manage their land through riparian buffers and grass swales to “grow the crop of water quality” much the same as dairy and potato farmers do for their cash crops?

In many respects, provision of ecosystem services would be no different than supplying traditional farm produce, with the level of compensation dependent on the quality and level of services provided. In contrast to the earlier description of subsidies, ecosystem servicespayments could focus directly on the quality and quantity of services delivered. Such exchanges would be arm’s-length payments for services rendered, creating an ongoing incentive for the landholder to manage the property so that service provision is ensured rather than the typical one-off application for funds in grants programs with (in practice) little follow-up by the funding body to ensure value for money. For cash-strapped farms, it becomes difficult to justify capital investments with long payback periods, uncertain returns, and potentially reduced land productivity. Service payments could address these common concerns by providing consistent funding sources. The farmers would begin to think differently about the nature of running a farm, as well, perhaps instilling new attitudes and priorities toward land management.

We covered some of Salzman's main points in my Property Theory class as part of our discussion of the role of property in the allocation of natural resources. Property typically comes up in natural resources theory in the context of giving people property rights in natural resources as a method of avoiding the tragedy of the commons. But as Salzman's example of the dairy farmers shows, natural resources issues are also often interwoven with land use issues. The idea of ecosystem services provides a new perspective on many land-use issues, and was helpful in our class discussion of the role of property in various natural resources issues, from global warming to management of the Chesapeake Bay's blue crab population.

One of the things I liked about Salzman's article is that it is a meld of theory and practice, providing reports on how actual ecosystem services projects have worked in the real world. It is also realistic, recognizing that ecosystem services aren't a magical cure-all for environmental and natural resources issues. That said, the concept of ecosystem services has great potential to reconfigure the debate on many property issues. Many people tend to approach the discussion of land use issues, like the preservation of wetlands or open space, from the perspective that a property owner developing land is causing harm to the environment and therefore doing something morally wrong. The difference between harm and benefit, however, often is in the eye of the beholder. Recognizing that when owners leave their land undeveloped they can provide a valuable service to society as a whole has the potential reduce the political controversy, and regulatory takings consequences, created by many land-use planning issues.

This paper analyzes the evolution of property rights legislation in Argentina with respect to new seed varieties. In comparison to the United States, Argentina has weak protection and enforcement of property rights for new seeds. These weak property rights affect the registration and commercialization of new soybean seeds. We show how private producers of seeds react to differences in property rights between Argentina and the United States and also between corn and soybeans. As we show, investment efforts will concentrate on those crops with more secure property rights at the expense of the markets in which property rights are less secure. This effect has important consequences for a developing market producing in a global market.

[UPDATE: The substance of this post has been included as footnote 46 if this essay.]

This is the third in a series of posts on my research into archival information about the Court's decisionmaking process in leading takings cases. My first two posts discussed the Court's conference notesonHawaii Housing Authority v. Midkiff and Berman v. Parker, two public use cases central to the Court's recent decision in Kelo v. New London. If you haven't read those posts, please note the caveats in my first post on Midkiff, which also apply to this post.

This post moves further back in time to Miller v. Schoene, 276 U.S. 272 (1928). Schoene involved the destruction of plaintiffs' cedar trees under Virginia's Cedar Rust Act. As the Court explained,

[C]edar rust is an infectious plant disease in the form of a fungoid organism which is destructive of the fruit and foliage of the apple, but without effect on the value of the cedar. Its life cycle has two phases which are passed alternately as a growth on red cedar and on apple trees.

Plaintiffs "challenged the constitutionality of the statute under the due process clause of the Fourteenth Amendment." I should note at this point that the Court's decision last term in Lingle v. Chevron calls into question the continued relevance of early substantive due process cases that on the surface resemble modern regulatory takings cases. (I discuss this further in an essay available on SSRN). This said, Schoene has been of interest in the regulatory takings context because the Court allowed the state to destroy plaintiffs' property without compensation beyond the costs of removal of the cedar trees.

Schoene is relatively easy to explain even under modern regulatory takings doctrine -- cedar plants infected with cedar rust certainly seem to qualify as a common-law nuisance, and mitigation of a common-law nuisance per se is not a taking. The case, however, presents an interesting contrast with Pennsylvania Coal v. Mahon, 260 U.S. 393 (1922). There, Justice Holmes' famous opinion of the Court held that a law that prevented the mining of coal in a manner that might cause subsidence under a dwelling amounted to a taking of the plaintiff coal company's property. As I'll explain further in a future post, I've finally been convinced that Mahon, like Schoene, was a substantive due process case, in that the Court was deciding whether the government act was a taking under the 14th Amendment's Due Process Clause rather than the 5th Amendment's Just Compensation Clause. I still disagree with many of the conclusions that scholars such as Bill Treanor, Robert Brauneis, and Brad Karkkainen draw from this fact, but, as I noted above, Lingle may have made this whole discussion less relevant to contemporary takings doctrine.

In any event, Holmes' famously cryptic opinion in Mahon has had a tremendous impact on modern regulatory takings law. In trying to figure out exactly what Holmes meant in Mahon, some people have looked to Schoene and noted that Holmes did not dissent in that case. Holmes' willingness to join the Court's opinion in Schoene is therefore of at least historical interest.

Conference notes do not exist from this era, but some evidence of each justice's views is preserved on the slips of paper used to circulate draft opinions to members of the Court. Most of these slips simply tell the author of the draft whether the replying justice will join in the proposed opinion. In Schoene, various justices wrote "yes", "I agree", or "I acquiesce" (the last from Justice Butler). Sometimes, however, a justice would write a substantive comment to the author of the opinion. Justice Holmes wrote a short note to Justice Stone, the author of the opinion in Schoene:

Good [illeg; presumably something like "I agree"]

OWH

It has been argued that destruction is not a taking. Answered in U.S. v. Welch, 267 U.S. 333, 339 in which I cite a Mass case where I [four more words that are hard to read; first appears to be "discussed" or "dismissed"; last appears to be "notion" or "motion"]

Welch involved a the destruction of a right-of-way easement by flooding caused by a government dam. At page 339 of the U.S. Reports, Holmes wrote:

A private right of way is an easement and is land. We perceive no reason why it should not be held to be acquired by the United States as an incident to the fee for which it admits that it must pay. But if it were only destroyed and ended, a destruction for public purposes may as well be a taking as would be an appropriation for the same end.

As support for this proposition, Holmes cites the "Mass case" referenced in his note to Justice Stone, Miller v. Horton, 152 Mass. 540 (1891). Miller v. Horton involved the destruction of plaintiff's horse, which was suspected of having a disease called glanders. It turned out that the horse was not infected in fact infected, and the plaintiff claimed compensation. Holmes, writing the opinion for the Massachusetts Supreme Court, recognized throughout his discussion that an infected horse was a nuisance, and could be destroyed without compensation to the owner. But what about a horse that was destroyed on the good faith belief that it was infected? Holmes wrote:

We cannot admit that the legislature has an unlimited right to destroy property without compensation, on the ground that destruction is not an appropriation to public use within article 10 of the declaration of rights. When a healthy horse is killed by a public officer, acting under a general statute, for fear that it should spread disease, the horse certainly would seem to be taken for public use as truly as if it were seized to drag an artillery wagon. The public equally appropriates it, whatever they do with it afterwards. Certainly, the legislature could not declare all cattle to be nuisances, and order them to be killed without compensation. [Citation omitted]. As we have said, it only declares certain diseased animals to be infected.

152 Mass. at 547-48. Holmes therefore concluded that the government had failed to establish a justification for their destruction of plaintiff's property.

Reading Schoene and Miller v. Horton together, it seems apparent that Holmes thought that the destruction of an actually diseased animal or plant was a taking of property but that no compensation was required because the government was acting to abate a nuisance. Where the property was not in fact a nuisance, compensation was due even if the government acted reasonably and in good faith.

Holmes therefore held a narrow view of the nuisance exception that is much closer to that articulated by Justice Scalia in the opinion of the Court in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), than that articulated by Justice Blackmun in dissent in that case. As I have argued before, Holmes also did not believe that any exercise of the police power per se was not a taking.

And what of Mahon? On one level, it can be seen as consistent with Holmes' non-deferential approach to exercises of the police power in the takings context. It is interesting, though, that Holmes did not reference Mahon in his note to Justice Stone, leaving open the possibility that Holmes saw Mahon and Schoene as presenting distinct issues. If you have any thoughts on the relationship between Mahon and Schoene, please leave a comment.

Ben Barros

[Comments are open, but I have to review them before they post, so there might be some delay]